For those new homebuyer wannabes and investors who are thinking about dipping their toe in the deep end of the “short sale” pool, with your permission here are a few myths and tips you should consider first. Some of the confusing verbiage you may know but our book of common sense suggests otherwise.
However in legal parlance here is a brief, basic description of a short sale. It’s a sale of real estate wherein the sales proceeds of the property will not entirely meet the total of debts (liens) still owed against the property.
And since the existing homeowner cannot afford to meet or pay the existing lien amounts in full, the lien holders agree to cancel their liens and accept less than what is owed on the remaining debts but can still sue the homeowner for any unpaid deficiency balance unless agreed otherwise. Sounds confusing, huh!
Banks – Short Sales – Fact Or Fiction
It has been bandied about that banks hate to even consider participating in a short sale since it is too hard for an investor or new homebuyer to qualify. That is not a true statement. If given a choice, banks would rather perform a short sale than foreclosure any day and twice on Sunday.
While a short sale saves the lender both time and money, a foreclosure creates a monolithic expense for banks and they have enough of those “headache” deals stacked up in the back room to last for years.
Qualifying For A Short Sale Purchase
Surely by now you have heard the ongoing Mantra: “There is nothing short about a short sale!” Yes it is true that some banks or mortgage company lenders are hard-headed about closing a short sale in an attempt to squeeze as much money out of the deal as possible.
Yet qualifying for a short sale is a lot easier than you think since all the homeowner needs is to have an actual financial hardship, change in their financial status, or discover that their home is worth less than what is owed; the proof being a current appraisal.
Short Sale Benefits For Buyers
Unlike foreclosure properties, investors will find a short sale home in far better condition simply because the home is still owned by the title holder and is ostensibly still living in the home. Meaning that the utilities are still in working order, lawns and plants maintained and not your usual “distressed” property.
In the final analysis it boils down to this. Short sales can drag on for months. An updated preliminary title report may show more than one lien against the property and one might be a Federal Tax lien that could be a “killer” to inherit.
But if you can “snag” a great short sale deal and the home defects are minimal you could help an existing homeowner out of a log-jam and possible foreclosure, while at the same time owning a well maintained home in the process. So be diligent and deal in facts no hyperbole.